The “Primer on Climate Change: Directors’ Duties and Disclosure Obligations” from Commonwealth Climate and Law Initiative and the Climate Governance Initiative (CGI), in collaboration with the Canada Climate Law Initiative, is noteworthy for its cross-jurisdictional overview and analysis of directors’ duties and companies’ disclosure obligations on climate risk-related matters, accompanied by relevant recent developments and targeted recommendations. While views about the jurisdiction-specific guidance may differ depending on company-specific views, approaches, and circumstances, the cross-jurisdictional, high-level questions for directors are worth most companies’ consideration in the context of directors’ fiduciary duties:
- Does my board actively consider the foreseeable and material financial risks to the company associated with climate change and the potential impacts on corporate risk management and strategy?
- Do I meaningfully engage with and scrutinize information and advice concerning climate-related risks presented to the board? Do I need to seek independent advice?
- If climate change is never on the board agenda or in management reports, do I ask why not?
- Does my board consider climate risks, both in relation to general strategic planning and risk management and in relation to specific projects or acquisitions that require board oversight or approval?
- Has my company embedded robust procedures to ensure that foreseeable and financially material climate risks are identified, dynamically managed, and appropriately reported to the board and in the financial statements and external reporting?
- Do I have a sufficient level of knowledge on the physical, transition, liability, and systemic risks associated with climate change to fulfill my duties to govern the management of these risks? Does my board identify potential knowledge gaps among board members and organize appropriate training, and/or commission independent expert advice, to address them?
The NACD is the CGI’s host chapter for US directors. The chapters aim to promote the implementation of the “Principles for Effective Climate Governance” published by the World Economic Forum in 2019 by providing non-executive directors with knowledge and resources to address climate change at the board level.
See this ESG Investor article; our recent report: “Climate Change: Board Toolkit”; and additional information & resources on our Climate Disclosure page.
This post first appeared in the weekly Society Alert!